Show Summary

Please check out this episode of the FlipNerd.com VIP Interview show, this time with Nav Athwal, Founder and CEO of RealtyShares. RealtyShares is a cutting edge crowd funding platform specifically for real estate investors. Unless you’ve been under a rock, you know that crowd funding for all sorts of startups and product launches has been hot in recent years, and it’s finally hit the real estate investing industry. Watch now to learn more!

Highlights of this show

Discuss crowd soured financing for real estate investors.

Meet Nav Athwal, Founder and CEO of RealtyShares.com.

Discuss changing legislation making it easier for real estate investors to raise money through crowd sourcing.

Learn about exciting ways that investors can invest in real estate by funding fractional deals and sharing risk.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey this is Mike Hambright with FlipNerd.com back for another FlipNerd VIP interview show. Today my guest is Nav Athwal, who is the CEO and founder of RealtyShares.com. Realty Shares is a crowdsourcing, or crowdfunding, platform specifically for real estate investors. It’s an exciting space right now, a lot of talk about crowdfunding for real estate investing. And obviously, a lot of real estate investors are always looking for new ways to raise capital to run their business. Before we get started with our interview, let’s take a second to recognize our sponsors.
I’d like to take a moment and recognize our featured sponsors.

Advertisement: RealtyMogul.com is an online market place for real estate investing, connecting borrowers and capital from accredited and institutional investors. Get a rehab loan fast and close in as little as 10 days. Rates start as low as 9%.

We’d also like to thank National Real Estate Insurance Group, the nation’s leading provider of insurance to the residential real estate investor market. From individual properties to large scale investors, National Real Estate Insurance Group is ready to serve you.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.

Nav: Thanks so much for having me, Mike. It’s a pleasure to be here.

Mike: Good. Good to have you. A hot topic right is crowdsourcing, specifically for real estate investors. And so you seem to be in an exciting space right now.

Nav: No it is very exciting. It’s a very new industry and we’re very happy to be pioneers in the real estate vertical.

Mike: Yeah, I’d say the biggest issue that real estate investors face, really there’s a lot of issues we face, but the two main issues are finding deals and financing them. So, you seem to be in a great position if you guys can grow this thing.

Nav: No, yeah, there’s definitely demand. We have a two-sided marketplace. We help investors put money into real estate. We help those looking for good deals raise capital. It’s pretty hot on both sides, so there’s definitely demand there.

Mike: Great, great. Well, before we talk a lot about your company, why don’t you tell us a little bit about your background? How did you get started and what brought up to this point?

Nav: No, yeah, great. So before I founded Realty Shares, I actually worked as a real estate attorney for three and a half years. I was in San Francisco, worked for a pretty big law firm, represented some really big international clients, including Archstone, AvalonBay, some big apartment developers, [related] America. Really helped them get approvals and entitlements for some of their larger projects in the bay area, including a 600 unit mix-use apartment building as well as a few other three, 400 unit buildings. So that’s what I did right before Realty Shares, represented these big clients on big real estate deals. And then before that, I actually was a real estate broker. So I helped close transactions. So I went from helping people buy homes in small office buildings to helping billion dollar corporations get major entitlements for big projects in and around the bay area.

Mike: Okay, okay. And I have some friends that know some other folks that have been in positions where they’re raising money for large international firms or huge funds to buy properties and I assume in all of that that you were doing, you started to recognize that, “Hey, maybe there’s a bigger opportunity for me here.” When you start to learn the ropes of how to raise money, I assume that something ticked off in your head there and got the wheels turning.

Nav: Yeah, no, I decided to quit my six-figure job to focus on eating ramen and building a company. And one of the reasons is exactly what you said. When you’re working so close to the industry, you realize that there is this access issue, that these big institutional clients are coming into these deals, but if you’re an average investor, you want to put money into real estate, you have very few ways to do so. You could invest in a
[inaudible 04:52], but beyond that, you really need to have a network that’s involved in real estate to be able to access good deals. And so, I would talk to coworkers who were investing in stocks and bonds and mutual funds through the 401k and were tired of the volatility and knew I was involved in real estate on the side and asked, “Hey, how are you doing it?
Can I get involved? I only have 10,000 dollars though. I don’t have 100,000 or 200,000.” And the answer was, “Sorry, 10,000 isn’t enough.”

Mike: Right, right. So now with your company, you are focused on helping, is it primarily residential? Or bigger commercial and multi-family as well?

Nav: Yeah, we do it all.

Mike: Okay.

Nav: So we’ve done residential. We’ve also done apartments in Dallas, your neck of the woods. We’re working on some retail properties. Really anything that there’s appetite for.

Mike: Okay, okay. So talk a little bit about, I guess, you run two fronts. You help investors find money, or find partnerships with people that want to do deals, and you help investors that have deals find money. Are those the two fronts you work?

Nav: Exactly.

Mike: Okay, okay. I guess if we start with investors that are looking to raise money to do deals that they find. Why don’t you tell us a little bit about how the process works and how you benefit them?

Nav: No, great. If you go to our website, there’s a different sign up process depending on whether you’re looking for investing in real estate or raising capital. So on the sponsor side — we call those looking to raise capital sponsors, since they’re sponsoring the deal — there’s a different investment flow, basically involves them creating an account and filling out a short application telling us what they want to raise capital for, what their past experience is, why they think they’re suitable to raise the capital. And then we start a pretty, I would say, strong vetting process at that time, where we want to ensure that the person that’s raising capital to our site really knows what they’re doing. It’s not just a first time investor who decided they want to quit their job and focus on single family home flips in Florida, it’s someone who’s done this, has a track record, has a pedigree, and that we think we can trust to raise capital through the site.
So as a result, over the last few weeks and months, we’ve been getting ten to 12 applications per week. So, there’s a lot of momentum on that side of the marketplace. We’ve probably been accepting one of the 12 per week. So it’s a pretty conservative underwriting process and we just do that to ensure high quality, because we don’t want just anyone raising capital to the site. So, within 24 hours of the sponsor submitting the application, sometimes 48 hours depending on backlog, we usually get back to them either with a, “Hey, this looks good. I want more information,” or,
“Hey, sorry. At this time, we just can’t accept the application.” And that’s an automated process. And that’s pretty much it. Once they’re approved to list, then we help them create a deal page on our site. We pretty much do all the work, help them raise capital pretty much on a hands off basis. They’re really not doing anything but making the deal details available to us so our investors know what they’re getting into. That’s it. It’s a pretty easy process.

Mike: So once they’re a sponsor, that just gets them in the door to present deals then, I assume. You don’t become a sponsor at the time, necessarily, that you have a deal. It’s just, “I want to use your platform to help me raise money for future deals.” And then as deals come along, they build out a deal page that you could go present to your money folks. Does that sound right?

Nav: Yeah, we get both. Sometimes we get sponsors saying, “Hey, I don’t have a specific deal, but I want to be ready to go when I do.”

Mike: Right.

Nav: Sometimes we have a sponsor that says, “Hey, I need to close this deal in three weeks and here’s my background. What do you think?” And we definitely will entertain either, it just depends [inaudible 08:56]
background and the deal.

Mike: Okay. But once they’re set up as a sponsor, the process, I assume, is easier to bring additional deals, incremental deals your way.

Nav: Yeah, the process is not only simpler, also quicker, because we have two levels of checks. We have sponsor level checks and deal level checks. On a sponsor level, we do a background and credit check on each sponsor, just to make sure there’s no history of any sort of crimes, or bankruptcies, or foreclosures. And then once they’re approved on that side of the coin, approved as sponsors, then the next time around the only thing we’re really going to have vet is the deal, [not them] personally.

Mike: Okay, okay. I want to stick with this side of the deal, the sponsor side. Tell me how it works when somebody needs to do a repair draw. So obviously, in the business that I’m in, sometimes the repairs on a house are more than the cost of the acquisition of the house. Of course, that depends on what market you’re in and the size of the houses, in terms of total dollars. Talk a little bit about how repair draws work.

Nav: Yeah, so a lot of our sponsors are in the rehab business. So they’ll buy a home for let’s say 30,000 dollars, have to put in another 20, 30,000 dollars of rehab money. Because we’re a pretty small company, we’ve started to figure out more creative ways to do it than having to actually monitor the repairs and monitor repair draws. So what we’ve created is a system where we just ask them. We’ll end up with let’s say 80 percent or 90 percent of costs, including a repair and purchase price, but we’ll ask that the sponsor put up cross collateral, just during the repair duration, and then we’ll release the cross collateral. That way we don’t have to monitor the repair draws and really make the funds available after certain milestones. We just say, “Hey, there’s a lean on the subject property, a lean on a free and clear property, and we’ll release the lean on the free and clear as soon as the repairs are done and we verify that.”
Because our team’s small, because we don’t have the infrastructure, and because we’re doing deals nationally — we’ve already done deals in six states — we thought that was a more innovative way to approach it. And if the sponsor just doesn’t have another property, then we can do a repair draw. And in that case, what we do is we’ll hold some of the money in escrow for the repair work. [inaudible 11:23] hit certain milestones, those are decided based on mutual negotiations.

Mike: Okay, okay. And how about the initial deal, the acquisition? Do you have appraisals done? What do you do protect the investor side of the deal, the money side?

Nav: In most cases, an appraisal, an ARV appraisal, but in some cases, a BPO will work as well. It just depends on the circumstances, the sponsor, and their track record. If they’ve done 100 homes in a specific market, then a BPO sometimes will be fine, because we have enough trust in them, in their ability. In other cases, we’ll go and get an appraisal. We definitely require some sort of evaluation statement. BPO will work in some cases as well.

Mike: Okay, okay. And then, moving over the other side, the money side of the business. You refer to actual investors bringing deals as sponsors. What’s the other side? What do you call the other side?

Nav: Investors.

Mike: What? Say that again.

Nav: We just call them investors.

Mike: Okay, okay. All right, so the investor side. What does that investor typically look like? Is it somebody that has access to a lot of money? Or somebody that has a little bit of money, but just not the ability to do deals themselves? Probably a little bit of both, I assume.

Nav: So one thing really quickly right off the bat is, our industry is pretty highly regulated by the SEC, the Securities and Exchange Commission
[inaudible 12:49]. We structure them as limited liability companies and investors buy shares in these companies. So because of that, we’re in the business of helping the offer and sale of securities. And because we are in that business, we are today, unfortunately, forced to only be limited to accredited investors. So accredited investors are defined as investors that are making at least 200,000 dollars or more a year, 300,000 dollars or more with their spouse, or having a net worth of a million or more, excluding their personal residence. So if you don’t meet those criteria, unfortunately today you can’t use our site to actually invest.
I won’t get into the details here, but there is some pretty monumental legislation coming down. Legislation’s already come down. There’s some pretty great rules coming down from the SEC, probably in spring of 2014, that could change that for the first time since the Great Depression. But at the moment, that’s one of our limitations. A forced limitation more than something we’ve actually come up with on our own. You don’t have to be rich to be accredited. 200,000 dollars, a lot of big city lawyers and accountants make that. But within that, we do have a range of investors. And when I say a range, I mean everyone from a retiree, to a engineer at Facebook or Google, to a doctor, a lawyer, an accountant. We also have self-directed IRA investors that use EndTrust or Kingdom Trust to invest through their IRA and get tax savings that way. We are opening our doors this month to international investors as well, since they’re not subject to the same domestic-based securities laws.

Mike: Okay, okay. So you find investors and how are deals presented to them, in terms of available deals that come along?

Nav: Yeah. I wish I could give you a demo. Once they come on our site, during the sign up process, we verify that they’re accredited. Once we verify that, they’re basically given access to a deal browse page where they can basically browse a number of deals and can sort those deals by hold period, or location, or type of property. If they see something they like, they click a button that just says, “More info.” And then when they click, “More info,” we give them a very detailed, but not too cumbersome, deal page. And that deal page includes things like, “What are the property details? When was it constructed? What was the purchase price? What’s the rehab scope of work? Who are the borrowers? What’s their background?” Or the sponsors. The appraisal and other deal-related documents are made available to them. And basically the purpose of the investment is made clear.
So this deal page pretty much gives them everything they need to know. And what we’ll do sometimes is we’ll get a lot of really great questions. We have some pretty smart investors. And what we’ll do is we’ll subsequently create a frequently asked questions tab on that same deal page, where if anything wasn’t addressed in the initial cut, it will be addressed on that FAQ. We’ve found investors are pretty satisfied with those deal pages and they think they’re getting what they need to make an informed decision.

Mike: Okay, okay. And in terms of, I guess not only the deals you’ve done so far, but the deals that you anticipate doing, obviously you’re in growth mode here — in my business, I know, when we assign or wholesale properties, we generally don’t need capital for that, but for rehabbing properties we do and for keeping properties long term as rentals. What do you see the demand coming for? I know you do them for short term flips or an investor’s going to rehab a house and turn around and sell it. How about longer term financing for rental properties? Are you seeing much activity there?

Nav: Yeah, we are. We pretty much see everything in the kitchen sink. Probably, I would say, 20 percent of the applications we get are for investors that are buying residential properties for buy and hold, because they don’t [inaudible 17:09] market in their specific geography makes sense anymore, either because they’ve been outpriced by institutions and so they’d have to move their price point up, or because they just think, “The capital is so darn good, why sell it? Why not just hold it and really get a mid teens cash flow return?”

Mike: Right, right. Okay. Well, how do you present deals to your investors? Is it first come first serve? Is there some sort of priority? Do they have to bid for the rates they’re willing to lend at? Tell me a little bit about how that works.

Nav: Yeah, it is first come first serve. We’re probably putting up two deals a week on average now. Our goal by the next six months is to really increase that number tremendously so investors do have [inaudible 18:01]
options. So each month we’re trying to add at least one deal a week. So next month hopefully it’ll be three and then four and so on. So what we do each time, once we get the deal page up, we’ll send basically an email to all of our investors saying, “Hey, this new deal’s up. Here’s the highlights. Come and check it out for yourself.” And at that time, it’s kind of a feeding frenzy. Over the last few months our deals have been not only getting funded within hours, they’ve also been over-subscribed at times. So investors are pretty upset when they’re left out of a deal they thought was a great deal.
What we’ve started to do is we do have a lot of repeat investors. The great thing about what we’re doing is you can actually invest in real estate for as little as 1,000 dollars, in some cases 5,000 dollars. So that same guy that was otherwise going to have to put 50k into a deal, can come on our site and do it across ten deals. So, they do want to invest in more than just one property. So for a lot of our repeat investors that have been with us since the beginning, we will preview some of the deals to them. So say, “Hey, look. We’re putting this up at 10am tomorrow. We’re giving you a first look. Check it out.” So that’s how the process works.

Mike: So you break the investment needed into shares, but you don’t restrict people from saying, “I’ll do the whole deal myself.”

Nav: Yeah.

Mike: But they may self-restrict, because they don’t want all their eggs in one basket, per se.

Nav: That’s right, exactly. We don’t have a maximum. We do have a minimum, we don’t have a maximum. We have never had anyone take the whole deal, but we’ve had some investors come pretty close to it. So yeah, on average our investors are probably putting in about 15 to 16,000 dollars per deal.

Mike: Okay, okay. And how are the rates determined?

Nav: We see ourselves as more of an intermediary than a bank or anything. We’re just trying to operate a technology marketplace. And that marketplace happens to deal in real estate. So we don’t try to dictate terms or anything, but what we do is when the sponsor first applies and says, “Hey, this is what I want to pay in terms of interest or preferred return.” We’ll say, “Hey, that’s probably [inaudible 20:10] with our investors,” or, “That probably will work.” And so sometimes sponsors will come and say, “What will work for your investors? What have you sold in the past? What have they been willing to take?” And we’ll say, “This is the rate.” And they’ll say, “Okay, that works great,” or, “Hey, sorry. That’s too expensive for me.” Right now there’s really no science to it. We will be developing some proprietary technology probably in the future that will help us better determine rates. But right now, [inaudible 20:35] what will the market accept? And that market happens to be a bunch of small, individual investors.

Mike: Mm-hmm. Can you give an idea of what typical rates are? I’m just curious how it compares to private money, hard money, things like that, where you lay in the spectrum.

Nav: Yeah. So today, on average, and these are historical numbers and definitely could change, anywhere from ten to 11 percent annualized is the rates that we’ve been dealing with. In certain markets, if you’re in the southeast versus California, core markets versus tertiary, secondary markets, the rates will change. So, it really depends on the risk, how long the maturity is. If it’s a three month maturity, you’re effective rate as a sponsor is only four percent, if it’s a 12 percent rate. Or actually three percent. So it really depends on a lot of factors, but on average that’s what we’re seeing.

Mike: Okay, and how about other expenses, origination points, and things like that?

Nav: Yeah, we do have an admin fee that we charge [as] a platform. We don’t make money on that fee. It’s really just a cost recovery fee, because we do set these up as separate LLCs, we do have certain overhead costs per deal. And that could be anywhere from two to two and a half percent.

Mike: Okay. Tell me, again, if somebody is paying — I want to get a little more detail about your model, your business model specifically, because I’m always interested in that — but if a sponsor is paying, let’s just say they’re paying ten percent to an investor, does that ten percent pass all the way through the investor, or do you get a piece of that as well?

Nav: So because the up front fee is merely a cost recovery fee, we do take a small spread. That’s [inaudible 22:30] anywhere from a point to two points on the deal. So, we’re charging the sponsor, let’s say, ten or 11 percent, then the investor’s really getting eight or nine percent.

Mike: Okay.

Nav: So those are the two ways in which we really recoup any money or make money. One is the admin fee, which is potentially two percent. That’s really to cover our costs. And then the back end fee gives us some sort of profit.

Mike: And are there any costs to become a sponsor, to become an investor?

Nav: No, there’s no cost there. So, if you’re successful in getting on the platform, the costs kick in, but if we tell you, “Sorry. Hey, this isn’t going to work today,” there’s no charge.

Mike: Right. And so for interim financing, short term financing, typically those rates tend to be higher than longer term buy and hold type investments. Does that hold true on your platform as well, would you say?

Nav: I think it depends on the deal, but in short, yeah.

Mike: Yeah, because ten or 11 percent for a rental is pretty steep, but not bad for interim money.

Nav: Well another to keep in mind is, a lot of our buy and hold properties, we don’t structure as debt, we structure as preferred equity. So we do give the option for investors to either come in as lenders and really get a secured position and interest rate and get their money back in six months. Or we also give them the potential to come in and actually become owners of the property through a limited preferred equity structure. And in those cases, there’s more of a preferred return structure. It could be eight or nine percent, and then there’s a profit split after that, so like a waterfall structure. So it really depends on the investor and the risk and return appetites, as well as the sponsor and what they’re willing to accept, because they may be able to get five percent debt on a five year deal, but they still need 20 to 30 percent equity. So, we’ll help them there as well.

Mike: Hmm, okay, okay. So, tell us a little bit about the business model for you. Some of that’s just come as to the ways that you make money. Are there any other details in the short term? Talk a little bit about your growth plans from here. But is that the primary structure of your business, is taking a spread on the fees and charging some origination fees?

Nav: Yeah that’s pretty much it right now at this stage of our company. As you probably have figured out, we’re definitely not becoming rich on any one deal. This whole business is a very long play where we’re trying to build a very robust marketplace. [inaudible 25:15] the capital raising process becomes much more streamlined. So that’s all going to depend on our volume. We’re trying to get to a volume that’s potentially 50, 100, 500 deals a month, not just ten deals a month, [inaudible 25:30] doing today.
So that’s when we really start becoming a good business. Not only a good business in terms of actually generating revenue, but a good business in terms of investors really loving to use our platform, because they know they’re going to be able to access deals in ten to 20 different markets at any given time. As we progress and as we grow, I’m sure there will be other ways to monetize or even reduce fees, because we’ll be doing more volume. We’re not really worried about making money right now, we’re really worried about building a sustainable marketplace that they can’t wait to tell their uncle, or aunt, or cousin about, because they earned an eight percent or nine percent annualized yield, really passively investing in real estate from the convenience of their laptop or tablet.

Mike: Right, right. One question I had about sponsors specifically, do they get rated on previous deals? So if they come back, to give more credibility to their next deal? Is that a part of your model as well?

Nav: We should hire you as a consultant, Mike.

Mike: Yeah, hey.

Nav: Yeah, we definitely will be doing historical ratings. Right now, we’re probably too early in our marketplace lifetime to really do that,
[inaudible 26:45] that point we’ve had repeat sponsors [inaudible 26:48]
multiple deals. And 100 percent, we’re going to have some sort of way to see how they’ve done, what they’re historical performance was, on the platform and off the platform, right? Both Realty Shares, and I’m sure they were raising money before Realty Shares, so there as well. What we’re working on next is we’re going to put in, probably in the next month, is a stats page on our site where you can see how much we’ve raised, what markets, what the yield was, so that investors have a better idea of what to expect when they come on our site before even creating an account. We’re definitely going to be adding features that help investors not only determine, “Is this deal good?” but, “Is ABC company the right fit for this deal?”

Mike: Right, right. I would suspect that as you get more robust, sponsors would get better rates in the future if they have a proven track record, and investors would probably be willing to accept a lower rate. So, could benefit everybody. It’s just a more secure deal.

Nav: Exactly, exactly.

Mike: I’ve found that with myself, as I’ve moved through my business, I’ve bought almost 300 houses and lost money on four deals. And that’s kind of unprecedented in the last five years.

Nav: Exactly. [inaudible 27:59] track record will help investors not only ease their reservations, but also help sponsors get better rates.

Mike: Right, right. Awesome. So what have we not talked about yet about your platform?

Nav: I think we’ve covered a lot of it. I think it really comes to how we’re going to continue to build this marketplace. One reason I love talking to you is I know you deal with a lot of sponsors and you’re helping them grow their business. [inaudible 28:29] parallel track here for us. It’s kind of like you’re their elementary and high school and we’re their college. You’re helping them start and get on their feet and really start doing this and once they’ve got a track record, they come to us and can get hopefully a nice sustainable source of capital to continue doing it. And you sponsors out there listening that work with Mike, you definitely should visit our website www.realtyshares.com. Check it out. And I encourage you to apply. We do have a very robust underwriting process, but if you’re the right sponsor for the platform, we’d love to work with you.

Mike: Sounds great. Yeah, we’ll definitely add links below the video here for folks to find you and help promote you as much as we can.

Nav: One thing, and maybe this is because I was a lawyer before this, but I do think the regulation is important, because I think protecting investors is above all the most important thing in this business. Investors will sometimes come in and think an investment’s a good deal, and really the curation process that we create, the background checks, credit checks, but also the regulations that sometimes can go overboard, but at times are there to protect investors, I think, are important as well. So we take pride in knowing that we do these vets and checks and really make sure that we’re operating within the law. So we encourage anyone else trying to do this to definitely stay within the confines of the regulations, but at the same time, we’re also trying to create more access for both sponsors and investors. We’re happy to be one of he pioneers and very excited to be one of the pioneers in this space.

Mike: Yeah, it’s definitely a really interesting industry. I don’t know if you call industry yet, but a money raising opportunity that I think everybody’s got their eye on right now. I did want to ask you, with the fact that you have to set up legal entities and things like that, what is the typical turn around time for closing a deal? And I know you’ve got the time to get it funded and things like that. The way that I coach investors is to try to make sure that they have funding lined up or a pretty good sense that they can get it lined up when they find a deal. It allows them to buy with more confidence. In all honesty, if they are making offers on houses and in the back of their mind worried about, “What am I going to do if I get it?” that doesn’t lend a lot of confidence. But in terms of turn around times, what does that typically look like through you guys?

Nav: Yeah, it’s a great question. We get that question a lot because real estate is a fleeting asset. If you don’t have the money, you lose it. Right now, this would be, again, estimates, depending on the amount of the raise, we take about three to five days to do the vetting process. We do the initial vet right when you apply and say, “Okay, this is going to work,” or not. [inaudible 31:34] on your resume. If we think the resume looks strong enough, then we will say, “Okay, bring us a deal. Let’s conduct our vetting process.” We find any red flags during that vetting process, obviously we don’t proceed. But three to five days, really, when we figure out, “Okay, this looks good. Let’s proceed.”
And then after that it could take anywhere from five to ten days to actually fund the deal. We’ve funded deals in hours, but they still need time to get the capital together, to get it to escrow, to get the closing docs together. So, I would say all in you’re looking at ten to 21 days, all in. It could be shorter and it could be longer, depending on the size of the raise. I think one thing that will happen in the next six months, is we’ll get a lot more certainty on that, because right now we’re still young. And to tell somebody you’re definitely going to get the fund in 15 days is definitely a shot in the dark. So, we try to give conservative estimates, and then hopefully under-promise and over-deliver. In the next six months to a year, we’ll probably have better ideas there.

Mike: Okay. And one thing I forgot to ask about the repair draws. Is that something that you fund at the time of closing? That the buyer would actually walk away with cash? Or do you wait for them to request it somehow? Or do they get it all up front?

Nav: We’ll fund a portion of it at close. So we don’t hold it back. This goes back to what I was saying about the cross collateral. If there’s cross collateral in place, we’ll make [inaudible 33:03] immediately. If there’s not cross collateral, then there will be cases where we may hold some of it back, [and make it available] at the front end. Again, over time we’ll probably have a more concrete way to do it, but right now we’re just basing it on the deal and who the borrower is.

Mike: Yeah, even with national lenders that I’ve known, it’s tricky. They have to have a network of appraisers, a network of people that can go out and look for, make sure the work was done, they have to have a process in place to release it based on whether certain scopes of work are done. And generally they’re passing all those costs onto the investor, but it’s still a lot of tasks to coordinate.

Nav: Yeah, and that’s one of the reasons the cross collateral thing was appealing was we’d rather just have additional security. And you as a sponsor, you would probably have more flexibility there as well and we would release the collateral when the rehab’s done, because we unfortunately don’t have appraisers all over the country yet.

Mike: Yeah. Great. Well, hey, thanks for joining us on the show today.

Nav: Mike, it’s a pleasure and I was happy to be here.

Mike: Awesome. Hey everybody, it’s Nav Athwal with Realty Shares. They got some great things going on, a really exciting space right now. And we’ll put the links below, but go to RealtyShares.com, learn more about what these guys are doing. And I encourage you to obviously sign up, whether you want to be an investor or a sponsor, you have a deal that you need to get financed. I think in terms of being an option other than hard money, this sounds like it’s definitely a lower rate, in terms of ease of use and things like that. So it sounds like it’s potentially a great opportunity for everybody involved. Awesome. Well thanks, Nav.

Nav: Thanks so much, Mike.

Mike: All right, We’ll see you soon. Bye bye.
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